Do I Really Need a Business Plan?

Business plan writing

Most prospective entrepreneurs think that a business plan is only necessary if they plan to apply for a loan, grant, or other form of venture capital. While a business plan is vital for securing funding, it is also necessary for other purposes. Therefore, my answer to this question is a resounding “yes”.

Any serious business owner needs a business plan. A business plan is necessary for all types of business endeavors including corporations, limited liability companies, sole proprietorships, and even side hustles. Taking the time to develop a sound business plan from the beginning can save you much time and frustration in the long run.

Keep in mind that a business plan can be simple, this is especially the case for side hustles and sole proprietorships. However, regardless of the type of business it should include basic elements. These basic elements will give you a solid foundation in which to build an informed business structure.

Here are some elements that you should include in your business plan:

Mission and Vision

Having a sound mission and vision for your business is crucial whether you write it down or not. You should have a purpose (or mission) for starting your business. And, this purpose should go beyond simply wanting to make money. The desire to make money rarely keeps an entrepreneur motivated beyond a few short months.

It typically takes a small business about 2-3 years to start realizing a profit. It can take anywhere from 7-10 years for a business to realize a true return on investment. While it does happen in some instances, overnight business success is a rarity. It takes the average business at least two years to begin seeing some type of financial gain. And, this is the amount of time for the average business – this means that some businesses will take even longer.

Discover Your Entrepreneurial Passion

I emphasize this point because if you are solely in it for the money, you will easily turn away if you don’t start realizing a profit within the first few months. Sadly, I see this happen with some of my clients and others quite frequently. In fact, this is why they often come to me because they need motivation and inspiration to keep going.

Having a sound mission and vision can curtail some of the angst that new business owners experience during the start-up years. A mission statement outlines why you are in business.

What is your purpose or overall goal that you want to achieve from your business? Knowing your reason “why” will keep you going through tough times. This indicates what you are truly passionate about and your passion will drive your motivation.

A vision is about the future trajectory of your business. How do you envision the business 5, 10, or 20 years from now? A clear vision is also a strong motivator for seeing your business through. It paves the road ahead for you and your stakeholders.

Market Analysis

Conducting a viable market analysis is also crucial to your business success. You need to understand the market that you serve in regards to consumer likes and dislikes, trends, competition, etc.. There is no shortcut for this step as it will help determine if your business model even makes sense.

A business should never be developed solely based on the preferences of the business owner. Doing so could be a grave mistake as your products or services may not sell well. While much of your creativity and individual expression will go into developing your business, you still need to be very aware of what’s currently in demand.

This is where market research comes into play. Performing a market analysis can help you understand your target market so that you can better serve their needs. A well-rounded market analysis should include the following elements:

  • Description of your target market
  • Traits or characteristics of your target market
  • Size, growth, and other trends impacting your target market
  • Prospective profitability of your niche market
  • An analysis of your greatest competitors
  • Legal and regulatory issues impacting your niche market

You can conduct your own market analysis or have someone do it for you. There are plenty of excellent online resources that can give you vital feedback about your target market. I strongly recommend that you do some research on your own in this area.

However, using a reputable company to perform this task can be even more helpful for you. This way you can reduce the propensity for bias in your own research. It is easy for us to skip or ignore information that is not favorable to our goals. Though such information is often useful in helping us make truly informed decisions.

For instance, if you are keenly set on starting a particular business you will most likely look for information that encourages you to do so. You may ignore vital information that warns you about potential pitfalls of the niche market that you wish to enter. This could be detrimental to the success of your business. Using a market research company can greatly decrease the potential for bias in such instances.

Marketing and Sales Strategy

Thoughtfully integrating a marketing and sales strategy can be beneficial to you in a number of ways. Marketing is all about getting the word out about your business. Many business owners think that they will simply build a website, YouTube channel, podcast, physical storefront, etc. and people will just show up. This is not the way business growth generally works, especially in today’s competitive market.

Asanee Graphic Design Services

You have to let people know that you are open for business. Even more, you have to let them know what you do and why you are different from others who do the same thing. You also have to let them know how to acquire your products or services. These elements are all part of a marketing strategy that can take considerable ingenuity, time, and money to fully develop. You need to know this information before you start your business.

A sales strategy incorporates the elements of pricing and selling products and/or services. The first thing that you need to think about is how much you plan to charge for your goods. This is probably one of the greatest mistakes that new business owners make when they first start.

They usually set their prices based on the market value rather than the true value of their products or services. In other words, they scan the prices of similar products or services in their niche market and set their own rates using this information.

However, they should be more focused on the actual value of the product or service. The intrinsic value of a product or service involves many elements including cost of supplies, materials, overhead, time, expertise, labor, craftsmanship, etc.

The sales strategy outlines who will be involved with selling and marketing the business, what sales channels will be used, etc. It is critical to ascertain these details upfront as they will help shape the overall success of your business.

Financial Plan

Having a realistic financial plan for your business is also imperative. Your financial plan should outline the estimated start-up costs of your business and costs for future years. It should also include your plan for securing financial capital to start your business.

This is another common area of frustration for new business owners. They often fail to count up the cost of doing business and are unable to maintain a sovereign business structure because of lack of funding. That’s why you need to outline your financial strategy before you get started.

Summary

As you see, it is important to plan for many important elements pertaining to your business before you get started. This doesn’t necessarily have to be outlined in a specific style or format. However, you should give thoughtful consideration to the above-mentioned and other aspects of your business in order to avoid unnecessary mistakes. This is why it is vitally important to have a business plan.

10 thoughts on “Do I Really Need a Business Plan?

  1. A business plan is necessary for all types of business. It really save ones ass in the business. A business plan gives guide to the owner and to know what step is next. A well planned business is a successful business.

  2. Yes and nothing but a capital YES is the answer to this question. Business is the most important thing to get before embarking on the business fully. Most prospective entrepreneurs think that a business plan is only necessary if they plan to apply for a loan, grant, or other form of venture capital. Think beyond the fact that it is used for securing loans, it is also necessary for other purposes. Thanks for this good post.

  3. Why not, business plan or really needed in businesses. I even see it as a key ingredient to company’s success. Thanks for making us have a view of some elements that one should include in ones business plan. Thanks for this profitable post.

  4. Business plan is extremely necessary in any business as it gives the business owner recurrent guide to plan, structure and implements plans. It’s a building block like a pillar, it’s fundamental and I thereby consider it a must get.

  5. I agree with you on the point about having a more solid mission for your business apart from merely making money. It’s true that most businesses won’t turn a profit in the first few years and that can discourage some entrepreneurs if making money was their sole purpose for starting the business.

  6. I have seen many businesses fail simply because they never did enough legwork to understand their market. It is good that you stressed the importance of good market analysis before launching a business.

  7. I think one of the reasons many entrepreneurs fail to conduct a sound market research is in a bid to save costs. It should be noted that such shortcuts can cost the entrepreneur a lot in the long run.

  8. It is difficult to overstate the importance of a business plan in any endeavor whether big or small. It provides a good compass to help keep the entrepreneur focused on the important goals. Great article and thanks so much for sharing.

  9. A new business needs a proper plan and strategy like If we want to start a new business then we have to ensure that we have a good idea to start and grow that business further.There is no shortcut of hardwork so we have to do some hard work to grow our business.

  10. Lack of a sound financial plan can put you out of business fast. Those initial costs of a way of running high fast if not watched.

Comments are closed.